B.C. Finance Minister Carole James handed down her third consecutive balanced budget — a financial blueprint that anticipates a $227 million surplus and contains an assortment of either new or increased taxes and a new child benefit that goes into effect this year.
The most significant tax for business is the new employer payroll tax, which partially went into effect last year, and is now in full effect. Employers will also have to budget to pay higher minimum wages, which will rise from $14.60 per hour in 2020 to $15.20 per hour in 2021.
Higher-income British Columbians will pay more in income taxes, while B.C. families should see more money in their pockets, as the Medical Services Plan (MSP) is now fully eliminated and a new child benefit that was announced in last year’s budget takes effect Oct. 1.
Employers that did not previously cover their employees’ MSP premiums are now paying a new employer health tax. However, the $1.9 billion it will raise in 2020-21 is still $800 million short of the $2.7 billion that MSP raised, so that shortfall has to be absorbed through other parts of the budget.
British Columbians who make more than $220,000 a year will pay more in income taxes, as the new marginal income tax rate will rise to 20.5 per cent for the upper tax bracket. That’s on top of an increase to the upper tax bracket two years ago.
“We have asked the top one per cent to pay a little bit more,” James said. “We believe that they benefited from a strong economy; we believe they can contribute a little bit more.”
In total, the government expects an increase of $343 million in tax revenue for 2020-21, despite an anticipated decrease of $43 million from declining resource revenue, particularly from the forestry and mining sectors.
Consumers will pay more for pop, as a PST exemption on sweetened beverages will be eliminated, and if they vape, they’ll pay a new $0.29 tax on vape juice.
The budget continues to provide additional funding for child care, but the $10 a day daycare promised by the B.C. NDP before the last election seems to be nowhere on the immediate horizon — nor has a $400 rebate for renters materialized in the 2020-21 budget.
James blamed the B.C. Green Party, with which the NDP has a governing agreement, for not introducing the rebate promised in 2017.
“The Greens are not in support, and they are minority partners in this,” she said. “They are not in support of a renter’s rebate.”
While a number of measures aimed at cooling Vancouver’s overheated housing market — a speculation tax, for example — has had some impact, real estate prices still remain unaffordable for many would-be homeowners.
“I don’t think there’s anyone who would say we’ve reached affordable housing in British Columbia,” James said. “But what you aren’t seeing is the kind of spikes that you were seeing with a speculative real estate market.”
One of the biggest tax increases to be felt by most British Columbians is not unexpected. The B.C. carbon tax will rise another $5 per tonne in 2020, which is roughly $0.10 per litre for gasoline and $0.09 per cubic metre for natural gas.
There are words in the 2020 budget for B.C.’s struggling forestry sector, but almost no money. A meager $13 million is earmarked for “new opportunities for the bioeconomy and revitalizing the forestry sector.”
James noted a number of measures her government has implemented to help the forestry sector adjust to the new realities of a shrinking timber supply, but said there is no short-term fix to the crisis currently gripping the sector, which has seen numerous sawmill closures.
“This is a problem that didn’t arrive overnight and isn’t going to be fixed overnight,” James said. “It’s going to take some time to look at revitalization in the forest industry.”
Perhaps the most significant new measure in an otherwise stay-the-course three-year plan is the new B.C. Child Opportunity Benefit, which was announced in last year’s budget but which takes effect this year, on Oct. 1.
It provides up to $1,600 annually per child, and up to $3,400 for a family with three children. It is not universal, however. It works on a sliding scale, with the cut-off being $114,000 annually, at which point families are not qualified to receive the benefit. The government expects close to 300,000 families to receive the benefit.
The payments will be made monthly starting Oct. 1. As James pointed out, the old child benefit applied only to children up to the age of six, whereas the new one applies until the child reaches 18.
The budget continues record spending on First Nations, through $3 billion in gambling revenue sharing over three years, and includes money for on reserve housing, which has historically been strictly a federal responsibility.
As for the financial “dumpster fire” engulfing the Insurance Corp. of British Columbia, the Crown corporation posted a $91 million loss for 2019-20, which is an improvement over 2018-19, when it lost more than $1 billion.
James’ budget plan expands the provincial tax base by requiring e-commerce and streaming companies such as Netflix to register and collect provincial sales taxes. That measure is expected to raise $11 million in 2020-21 and $16 million in 2021-22.
The 2019-20 budget earmarked nearly $1 billion for the CleanBC plan, and the 2020-21 budget hikes that amount by $419 million, $120 million of which is for carbon tax rebates. It earmarks $155 million for industry for things like energy efficiency.
On the capital side of the budget, the government has allocated $22.9 billion over three years for infrastructure:
•$7.4 billion, transportation
•$6.4 billion, hospitals
•$2.8 billion, public schools
•$3.1 billion, post-secondary education
•$3.2 billion, housing.
The budget has money for the Pattullo Bridge, but nothing yet for the George Massey tunnel replacement project.
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Some of the bigger ticket items in capital spending include:
•$1.2 billion, Pattullo Bridge
•$1.6 billion, Broadway line
•$1.3 billion, four-laning Highway 1 to Alberta border
•$1.3 billion, Royal Columbia Hospital expansion
•$2 billion, new St. Paul’s Hospital
